RALEIGH (June 29, 2011) – State lawmakers passed a budget on June 2nd that will likely impede North Carolina’s fragile recovery, a report released today finds, and place additional pressure on local governments, communities and families across the state.

The $19.7 billion budget for fiscal year 2011-2012 fails to take a balanced approach to the state’s real fiscal challenges, a report from the Budget & Tax Center finds, and also reduces the state’s investments in public structures that support economic growth.

The final budget, which spends $600 million less on public services than Governor Bev Perdue’s budget proposal, increased the budget gap to $2.5 billion by adding $188 million in tax cuts for businesses and the wealthiest North Carolinians, the report states. In turn, the final budget is “fundamentally unbalanced” and uses unsustainable financing, by funding recurring expenses with one-time money and reducing long-term revenue availability with tax cuts.

The legislature made 28 percent of its $1.7 billion in total cuts in the public education budget, 26 percent in health and human services, 20 percent in the UNC system, and 10 percent in justice and public safety programs. According to the report, cutting investments in early childhood education, reducing funds for classrooms and making post-secondary education more costly will only diminish the quality of the state’s workforce, at a time when the need for jobs and worker retraining has never been more urgent.

Overall, the report states, the cumulative impact of tax changes and spending cuts will cost North Carolina nearly 30,000 net private- and public-sector jobs, and lead to $2.3 billion in lost industry output.

“Strong public structures are needed to support a strong economy,” said Brenna Burch, a policy analyst with the Budget & Tax Center, and co-author of the report. “This budget weakens those public structures and, with them, North Carolina’s prospects for a speedy and sustained economic recovery.”